Namibian pension funds seek clarity as Fima may limit lump-sum retirement payouts

Pension funds are seeking clarity on whether the Financial Institutions and Markets Act (Fima) could limit retirement payout options, including access to lump-sum benefits.

A leaked memo from Gemlife retirement fund suggests that the act could reduce the number of options that fund members have at retirement.

Gemlife says that with the imminent implementation of the act under new legislative guidelines, retirees will be prohibited from withdrawing their full savings as a single cash payment and will instead be required to receive their benefits as taxable monthly pensions.

“As Fima currently stands, members of provident fund arrangements (like the Gemlife retirement fund) will no longer be allowed to take everything in cash.

This means that the retirement benefit can only be paid as a monthly annuity-pension,” principal officer Klaus Laborn says in the memo.

Pension funds are set to meet with the Namibia Financial Institutions Supervisory Authority (Namfisa) this morning at the Namibian Institute of Public Administration and Management to discuss the interpretation of the new law and potential consequences.
Laborn has declined to comment prior to the consultations.

The act was introduced to regulate Namibia’s non-banking financial institutions, including pension funds.

While preparing for retirement, people can choose between several types of funds, including pension funds and provident funds.

The difference between these two funds happens at retirement.

Under the current legislation, when a member retires, they can receive one-third of their benefit tax-free as a cash payout.

The remaining two-thirds are invested in an annuity that allows the retiree to receive a monthly payment.

This annuity is a separate product that is bought with the remaining two-thirds of the benefit.

However, under a provident fund, a person can choose not to purchase an annuity and instead take out the two-thirds of their benefit as a lump sum, which they will need to pay taxes on.

The internal memo from GemLife suggests that Fima would affect the funds in two ways. Firstly, there would be no option to take out the remaining two-thirds as a lump sum.

Instead, everyone would need to buy an annuity.

Secondly, members would not be able to take one third of the benefit tax-free in cash.

Others who have analysed the law agree that provident funds and one-third cash payments seem to disappear under the new law.

“It’s changing the existing status from being able to take one-third in cash – and when you retire you usually have cash needs.

As the law stands, it’s out of the question. You have to buy an annuity with your full cash,” founder of Retirement Fund Solutions and trustee of the Benchmark Retirement Fund Tilman Friedrich says.

The consultation between industry players and Namfisa today aims to clarify how the act will be applied to pension funds.

When asked for comment yesterday, Namfisa preferred not to comment prior to the stakeholder meeting.

Affirmative Repositioning leader Job Amupanda released a video urging all concerned members to remain calm and wait for today’s meeting.
“Nothing has changed.

There is no story of saying you will not get your annuity. You will get your one-third when you’re going to retirement.

Relax at this stage. There is no Fima that will come through the back door and it is my understanding that nothing has changed,” Amupanda said.

He also brought up the preservation regulation, which is a separate issue that was raised during public consultations while the act was being developed.
The current retirement fund preservation rule allows a person to access 25% of their retirement fund before they turn 55.

The rule has been separated from the main body of the act, and will be re-worked and introduced by the Ministry of Finance at a later stage.

Namfisa’s public notice from November 2025 confirms that the preservation of retirement benefits will not be introduced together with the rest of the act.

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